Monday Jan 28th
EU - 09:00 - M3 Money Supply Y/Y.
US - 15:00 - New Home Sales.
Tuesday Jan 29th:
EU - 09:00 - Current Account.
UK - 11:00 - CBI Distributive Trades Realised
US - 13:30 - Durable & Core Durable Goods Orders M/M.
US - 14:00 - National HPI Composite-20 Y/Y.
US - 15:00 - Consumer Confidence.
Wednesday Jan 30th:
UK - 09:30 - Mortgage Approvals.
UK - 09:30 - Net Lending to Individuals M/M.
US - 13:15 - ADP Nonfarm Employment Change
US - 13:30 - GDP Annualized Q/Q.
US - 13:30 - GDP Deflator Annualised Q/Q.
US - 15:30 - Crude Oil Inventories
US - 19:15 - Interest Rate Statement.
Thursday Jan 31st:
GE - 08:55 - Unemployment Rate.
EU - 10:00 - CPI Y/Y.
EU - 10:00 - Consumer Confidence.
UK - 10:30 - Consumer Confidence.
US - 13:30 - Core PCE Price Index M/M.
US - 13:30 - Personal Spending M/M.
US - 13:30 - Personal Income M/M.
US - 13:30 - ECI Q/Q.
US - 13:30 - Unemployment Claims.
US - 14:45 - Chicago PMI.
Friday Feb 1st:
GE - 08:55 - Manufacturing PMI.
EU - 09:00 - Manufacturing PMI.
UK - 09:30 - Manufacturing PMI.
US - 13:30 - Nonfarm Employment Change.
US - 13:30 - Unemployment Claims.
US - 13:30 - Average Hourly Earnings M/M.
US - 15:00 - ISM Manufacturing Index & Manufacturing Index Prices
US - 15:00 - Consumer Sentiment.
US - 15:00 - Construction Spending M/M.
EU - Europe wide
FR - France
UK - United Kingdom
US - United States
GE - Germany
The week ahead.
Last week will go down as one of the defining moments in the history of the FOMC and Ben Bernakes tenure. The Feds emergency 0.75% rate cut, came on the back of global stock market crashes on Monday, and rapidly increasing concerns over the outlook for the US economy.
US markets were closed for Martin Luther King Day on Monday as the melee ensued on European markets. As with the 1987 and 2001 single day crashes, the Fed was quick to act as it cut rates before the cash market open. The initial response to the action was mixed, as traders were unsure how to interpret the magnitude of the actions. Some saw it as the Fed providing a much needed shot in the arm for the economy, while others saw it as an warning that the US economy was indeed in dire straights.
Eventually the bulls won out and the markets rallied, with the S&P 500 and Dow Jones actually managing to finish up on the week. While scepticism persists over the likely impact of the Bush economic stimulus package, markets were certainly buoyed by talk of plans for a bail out for ailing Monoline bond insurers such as Ambac and MBIA. Speculation also increased that the dramatic sell off in European equities on Monday, wasnt in fact due to concerns of a global recession, but because of the unwinding of massive fraudulent trades posted by a trader at Societe Generale. SGs Rogue trader took hidden positions against the falling market, which had to be unwound when discovered over the weekend. As these trades were made completely against the movements of European markets, they resulted in a $7.1Billlion dollar loss when they were forcedly unwound. The FOMC denied they knew about the fraud when they took their decision on Monday.
Currency markets reacted to hawkish comments from the ECB that indicated they would be sticking to their primary mandate of fighting inflation. They also denied that there was a US style subprime problem in the Eurozone. The Euro rose against the dollar, as speculation increased that there will be a further interest cut at next weeks FOMC meeting. The Pound also rose against the Dollar as the minutes from the last MPC meeting showed that the members had voted 8-1 for no change in interest rates. Safe haven assets such as Gold continued to benefit from continued uncertainties, with Gold pushing to all times highs of $923 per ounce on the back of mining problems in South Africa.
This week has many top tier US announcements, with the aforementioned FOMC rate decision at 19.15 on Thursday top of the list. In addition, traders will pay particular attention to Mondays new home sales data. It will probably be too soon for last weeks rate cut to filter down, but US mortgage brokers are already reporting a flurry of activity. Tuesday brings US core durable goods and consumer confidence figures into focus, while Wednesdays employment and GDP figures will add to an already significant week ahead.
Uncertainty abounds as evidenced by Fridays sell off in equities and a flight to quality over the weekend. Rumours of Belgian banks being hit by huge write downs and whispers hedge funds going bust hit the early positive sentiment on Friday. With so much uncertainty over how to interpret the Feds emergency rate cut in light of the SG fraud, traders are unsure of the size of the expected cut at this weeks FOMC meeting. With many top tier announcements in the pipeline, a volatility trade may be the better option for the week ahead. An up or down trade pays out if either of two predetermined triggers are hit. Setting these triggers as 1265 and 1385 on the S&P 500 could return 12% over the next 15 days.
David Evans
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